Show Notes:
Welcome, everyone, to Part 2, Episode 21 of Offshoot. I continue my conversation with Jim Griffin, the Managing Director and Co-Founder of Derivative Logic, a firm he started with his partner, Rex Evans, over 11 years ago. Before this recording, I didn’t have any personal connection to Jim, but I’ve consistently seen opportunities for operators to reduce risk through understanding and utilizing hedges and derivatives. I strongly suspected that having an expert like Jim on the show would be valuable for both you, the listener, and for me.
I think you’ll agree that Jim delivers.
Prior to his 11 years at Derivative Logic, Jim traded interest rates, currency, and commodity derivatives at UBS, Wells Fargo, Wachovia, and Bank of Tokyo-Mitsubishi. He holds an MBA in Finance from the University of Southern California and a BSBA in Finance and International Economics from the University of Arizona. His mission is to help clients achieve their investment goals by applying macroeconomic analysis, derivative products, structuring, and hedging strategies. He works with a broad range of institutions, including public entities, real estate finance companies, ultra-high-net-worth individuals, family offices, money managers, and tech companies.
We dive pretty deep into these topics, as I see hedging as a significant blind spot for many operators. With just a bit of awareness—some of which I hope you can gain from this episode—I think you’ll see how much money is being left on the table and how risk can be compartmentalized in unique ways.
In this episode, we cover topics such as:
- Providing clients with valuable technology to streamline your sales process and preserve internal resources
- How experience is a true differentiator in knowledge-based industries
- The impact of regulatory overlays and compliance on value creation at larger institutions
- Creative solutions that borrowers can use in response to lender-required rate caps
- The current lack of distress in the real estate market
- How a risk management document can help middle-market operators analyze and manage their cash flow collections
- Why both vision and execution are essential for success
- Why bank swaps are the most profitable product in a bank’s lineup, and how borrowers can gain transparency into the premiums they’re paying
- The inefficiencies in execution that are prevalent in the real estate industry
- Understanding fixed-rate loans by examining the lender’s creditworthiness and their internal cost of funds, plus the added spreads
- How integrity and relationships are central to Jim’s practice
Transcript
[00:49] Kevin Choquette: Welcome everyone to Part two of my podcast with Jim Griffin. If you haven’t caught part one, please go back and give that a listen. Jim covers his history there, talks about utilization of rate caps and how to navigate that in today’s market.
[01:03] We also talk about some of the distress in the commercial real estate market, or lack thereof, and how to best codify some risk management practices.
[01:12] Either way, I hope you enjoyed this. Part two with Jim Griffin. Thank you.
[01:22] Swap Execution this is something that I see as another opaque part of the market.
[01:29] Some of the regional banks have a swap desk and our clients will come to us and they’ll say, hey, we’re going to swap a rate and I’m not going to try to make up nominal rates here, but what they deem is a very attractive fixed rate deal.
[01:47] With a swap, the underlying note is a floating rate note.
[01:53] And then 18 or 24 months down the road they’re like, hey, my swap should be worth a ton of money because rates are up 200 basis points. And then you kind of back into the premium that they paid for that internal bank execution, which proves to be really high.
[02:15] I wonder what you can talk to about, like the efficiency of swap executions and how right or wrong borrowers can get it by not really understanding what they’re getting into.
[02:29] Jim Griffin: Understood, Kevin. So listeners should know this.
[02:35] A bank that is transacting an interest rate swaps, that interest rate swap, and all of the interest rate swaps that bank is transacting over time are the most profitable product of any product.
[02:51] Many banks will make more profit on the swap than they will on the underlying loan.
[02:57] And it’s a scenario that’s very opaque to the borrower in terms of the fees the bank is making. How do I know? I used to be the guy clocking those fees at the bank.
[03:08] That’s how I know. Yeah, so it’s not a bad thing. You know, this has been in existence, you know, for decades now and is a useful tool for the bank to do a comp to accomplish a couple of things.
[03:20] One is it fixes the rate for their borrower so that borrower has known interest expense, of course, meaning it synthetically turns a floating rate loan into a fixed rate loan.
[03:32] It also allows that bank to maintain floating rate assets on the bank’s balance sheet, which the bank likes. And if you don’t really know what I mean by that, remember Silicon Valley bank, First Republic bank, that had lots of fixed rate assets on their balance sheet?
[03:48] Not good for a bank to have fixed rate assets on their balance sheet. Best practice is floating rate. So floating rate loans combined with swaps again allow that bank to accomplish a couple of very good things for themselves.
[04:02] Profitability, fixed rate for their borrower and floating rate assets on their balance sheet. The issue is, as I mentioned, it’s laden with fees. And those fees can be significant for the borrower without the borrower even realizing it.
[04:19] So many banks easily charge 10, 20, 30, 40 basis points in fees in a swap, frankly, without borrowers even realizing it. And how does that manifest? That goes directly to the fixed rate that they receive or establish by executing the swap.
[04:42] So if I’m a borrower and I have a lot of knowledge around interest rate swaps, and I’m getting these fixed rate pricing indications from the bank as I’m proceeding toward closing my floating rate bank loan, and I plan on executing that swap as the bank is asking me to, any negotiation of that basis point fee again reduces the fixed rate that I end up with.
[05:08] So if their swap profit is say 40 basis points and I can cut that in half to 20, that lowers my fixed rate by 20 basis points directly.
[05:20] So the issue is many of the banks, most of them won’t disclose what the basis point fee is to the borrower. It’s just, here’s the fixed rate. Do you like it?
[05:29] Great, let’s close the loan and execute the swap.
[05:32] So it’s very opaque to the borrower most of the time.
[05:39] So really the only way borrowers would really know that or understand that, or really allow them to get a real handle on the fees that they’re being subjected to, is to frankly just hire somebody like us and allow them to construct that fixed rate into cost of funds the bank incurs by lending.
[06:02] Plus determining what we call the swap spread is that 40 basis points that I’ve been describing.
[06:09] Not a difficult calculation, but definitely not one that really any borrower in commercial real estate in the middle market can really understand or do by themselves.
[06:18] Then it’s just a question of if it’s fair or unfair to the borrower getting some expertise that allows them to negotiate that fee lower.
[06:31] Kevin Choquette: And as soon as you guys are at the table, is it sort of party’s over for the bank.
[06:39] Are you effective in saying, hey guys, you’ve got 40 basis points premium in here? We’d think that 20 is commercial.
[06:48] Jim Griffin: We usually are very effective. However, remember, Kevin, that the bank is taking risk in the swap.
[06:56] They need to make money so we don’t go in with a baseball bet on behalf of the borrower and beat that bank’s interest rate swap desk up. Too bad.
[07:07] We know what’s commercially acceptable and they know that we know.
[07:13] So it’s not a difficult conversation usually. And usually once it’s found out that we’re involved with the borrower, oftentimes the fixed rate quotations or indications suddenly improve if they were wide initially.
[07:30] So again, we don’t go in and beat up the bank on the spread Frank Clay or the swap profit because the borrower needs the loan. There could also be a real relationship that that borrower has with the bank.
[07:41] Right. We don’t want to endanger that or mess that up just based on one swap transaction. But it’s just a conversation around what’s commercially feasible and acceptable, something we see based on the risk that the bank is taking and then trying to negotiate as close to that as we possibly can.
[08:00] So really it’s a question of opacity for the borrower. They really don’t know what they’re paying.
[08:06] And if it’s excessive, which frankly, Kevin, in engagements like that that we have, is it excessive? It’s excessive maybe half the time, to be honest, not all the time in the bank’s defense, frankly, oftentimes it is excessive.
[08:23] That’s where we can definitely add value to borrowers in that case. There’s another scenario that we see too in commercial real estate, specifically with mortgage bankers, is that they really don’t have a real understanding on how that fixed rate is manifested.
[08:41] It’s the fixed rate through a bank loan and a swap or a fixed rate they’re looking at on a life insurance company term sheet. Really anywhere that quote unquote, fixed rate shows up, they really don’t have any sense of how that’s derived.
[08:55] So we do spend a fair amount of time in our Hedging 101 presentations that we do almost daily to different parties in industry on explaining things, things like that, and how to really understand and have the ability to truly compare, say, a fixed rate term sheet versus a floating rate term sheet combined with a cap or a swap and why Is that important for a mortgage banker?
[09:20] Well, it gives them greater insight and allows them to advise their borrower client on financing a whole lot better than just saying this is the fixed rate and this other fixed rate is lower.
[09:32] So let’s go with that one. Maybe not. So there’s a little more to it than I think most people realize.
[09:38] Kevin Choquette: And are you just referencing the underlying index and what its spread is over the index, or is it essentially.
[09:46] Jim Griffin: Okay, essentially, Kevin, So instead of index, it’s more, what is that lender’s cost of funds as an organization, as a lender, and then what spread on top of that are they adding to result in the fixed rate that they’re offering?
[10:00] So really what it turns out to be is a comparison of credit spreads between lenders and which one is more competitive.
[10:08] Because not all banks obviously have the same cost of funds. They have different deposit mixes and whatnot and different ways of funding themselves.
[10:18] But it’s essential, just from a conceptual basis at the very least, for mortgage bankers to really understand where their fixed rate comes from and at least start an understanding of comparing credit spreads, what that lender is truly charging to make that loan.
[10:36] Kevin Choquette: So if you’re, I’m just going to make up names here, you know, Prudential, Peru, Symmetra, you know, some sort of life code, you guys are going to the underlying credit and then establishing what their likely cost of capital is and then seeing the spread that they’re charging to get to a coupon that might be the same to the borrower.
[11:00] Jim Griffin: Essentially, yes. Of course, I would never or could never call those lenders and ask them, hey, what’s your cost of funds?
[11:07] Kevin Choquette: Right.
[11:08] Jim Griffin: They’re never going to, to tell me that.
[11:09] Kevin Choquette: Right.
[11:10] Jim Griffin: None of them would. So you sort of get to an approximation of what their cost of funds is and then you compare that to the fixed rate. The difference is the credit spread or the markup over their cost.
[11:22] So that involves, obviously there’s no hedging involved in that line of thought or anything like that. It’s just understanding interest rates, frankly, which are, I would argue, the blood of commercial real estate, frankly.
[11:38] There is always debt of some sort, usually most of the time. And really understanding how interest rates work, and that’s part of that understanding, is understanding where the fixed rate comes from.
[11:50] Kevin Choquette: You said we could sit here for a month. I won’t make you do that, but I tend to agree with you. There’s a lot on the table.
[11:56] There’s a couple other applications of this middle market operator that maybe we could talk about where I suspect you have more than sufficient expertise right now. A lot of folks are doing buy downs of rates and you know, we, we had a quote come through the other day, two point buy down was equating to a 38 basis point savings over the five year duration of the loan.
[12:26] How do you guys think about.
[12:29] I have a way. I don’t know if it’s the right way, but how do you guys think about assessing the value, the economic value of paying 2 points to save 38 basis points over five years?
[12:40] Or you know, a different scenario, 1.5 points to save 38 basis points over 5 years?
[12:47] Jim Griffin: Well, remember Kevin, we do everything we can, frankly to stay out of the financing analysis. To be honest, that’s your job.
[12:56] Kevin Choquette: Yeah.
[12:57] Jim Griffin: And we do not want to overlap with the likes of you. Why? You know, many of our referrals come from mortgage bankers. Right. Brokers. So we are very careful about usurping their value add to their borrower client.
[13:14] So if we do get involved in something like that. I’m not bailing out on you on that question unjustifiably, but if we are involved at any point, it’s just us sort of helping the mortgage banker to understand it such that they can present it to their borrower.
[13:29] Kevin Choquette: Yep.
[13:30] Jim Griffin: But we, but we absolutely are completely separate from, you know, we do not source financing. We don’t really spend a whole lot of time analyzing financing sources and the competitiveness of one versus the other.
[13:43] And that whole understanding fixed rate derivation conversation we had a minute ago is really just helping the mortgage banker understanding and being able to compete, you know, in terms of the value add to their borrower.
[13:57] So we don’t do a lot of that, frankly. Kevin, to answer your question.
[14:01] Kevin Choquette: Okay, fair enough.
[14:03] Let’s switch a little bit to the business. Like you, you’re running the business for 11 years now of derivative logic. I understand you have eight people on the team.
[14:13] How do you think about scale? Meaning, you know, trying to add headcount and pick up larger market share versus staying small? What is it that’s gotten you to.
[14:23] Jim Griffin: This size team just growing rapidly over time and needing qualified folks to just assist with the flow. To be honest with you, Kevin, we talked about the esoteric skill set, right.
[14:38] That is financial derivatives.
[14:42] Almost every single one of those eight people, seven out of the eight worked for large bank for years and years, just like I did. So they went from, you know, working for a very large banking organization to wanting to do something different, kind of like I did way back when.
[14:58] And that’s why they’re here, because they’re able to just sort of relax more and be more creative and all those things and reasons that I gave you earlier.
[15:06] But you know as well as I do it’s very difficult to scale a consulting business.
[15:14] So we employ different sets of technology that frankly disrupt part of the advisory service that we offer in the name of scale or for the effort of scale.
[15:27] So it’s sort of a scenario where the technology we have is combined with our advice that we give to give the client kind of a better, more efficient outcome than talking to Jim for two hours on Wednesday afternoon to explain interest rate swaps.
[15:43] You know what I mean?
[15:44] Kevin Choquette: Yep.
[15:44] Jim Griffin: So. Cause everything we do, Kevin, is in the weeds. Everything like that’s where we operate in the weeds, you know, with the numbers.
[15:52] So there is a way to not automate, but sort of create tech that allow the borrower client to self serve or frankly the lender client to self serve part of what we do.
[16:04] And we have tech that allows us to sort of do that more and more all the time. We’ll never completely disrupt our advisory offering. It’s just impossible. Because people don’t like that anyway, frankly.
[16:17] They like to talk to a person or not necessarily trust a number that spat out from a model. They want some context for that number and where could it go and where has it been and what’s your view and you know, that kind of thing.
[16:30] But you know, if there’s any hope of scaling a consulting business, you must disrupt part of your advisory offering in the name of scale. So that’s what we do.
[16:41] Kevin Choquette: If it’s steps one through 10, rather than starting with everybody at one, you’re trying to leverage some technology that maybe lets the client get from one to four on their own.
[16:50] They’re more highly qualified by the time they, they get to you, they’re more knowledgeable and then you’ve eliminated some percentage of the kickouts that would have dropped out in step two, three or four.
[17:02] Jim Griffin: That’s exactly right. Yeah. That’s not really anything you’re going to see much on our website and whatnot because it’s stuff we created completely custom that we built.
[17:13] And usually the life cycle of our tech, once the client has been a client for a bit, that’s when we start to introduce it. Because we’ve educated them to a point where they can use the tech versus if they’ve never purchased an interest rate cap before or never borrowed floating from a bank and transacted a swap to fix the rate, the technology is not going to make a lot of sense to them.
[17:39] So we have to get them to a certain level to where they can use it. And that’s kind of the business model at this point. But in terms of weaving tech through our, through our advisory service, it’s an ongoing project and process and will probably never end.
[17:55] Kevin Choquette: And for, for you guys, I was going to ask this and you just sort of brought me right there.
[18:00] What is the transition where, you know, you have a client versus a deal and when does that, how does the posture shift and when does it shift? It sounds like you have both.
[18:12] Right with same, same as us. We’ll take a transaction, happy to do it. Much prefer to have clients.
[18:19] Jim Griffin: Exactly.
[18:21] I’d say probably half of the brand new clients that contract with us are coming to us because they must transact for some reason. It’s a floating rate bank loan with a swap or a bridge lender that’s requiring a cap and whatnot.
[18:38] And they pretty quickly see based on our value add in that transaction, that they want to know us and talk to us more. So even after that initial transaction is over, they come back to us over and over and over again because they sort of want to have an expert at their fingertips or have a resource that they can ask questions to, either on a generic or a specific basis that’s going to give them the right answers and isn’t going to charge them for every minute of the conversation like an attorney would.
[19:09] So probably like you, Kevin, frankly, probably half my day is getting phone calls from people I kind of know or don’t know or may know where there’s no transaction at all that I’m engaged in.
[19:21] They’re just calling me or emailing me to ask me something because they saw something. And is this for real or does this make sense? Or what do you think? Or what do you think we should do?
[19:31] And then, as you know, once you continue to offer real value to people, they stay with you or they eventually transact or they eventually engage. So it’s not rocket science.
[19:42] Lots of people have that business model in business, and that’s definitely ours.
[19:46] Kevin Choquette: I like it. So let’s transition a little bit to the personal side here. But what was your goal? I mean, you gave a good background as to how you got here, I.
[19:56] E. You were, you know, sort of hobbled at the banks from providing the kinds of services that you had historically provided your clients and chose to go out on your own.
[20:08] But what was your goal in doing it? Like, where were you hoping to build this to? And where do you want to bring it?
[20:20] Jim Griffin: The goal upon establishment or creation of derivative logic, frankly, was the client relationship.
[20:27] So when I was at the large banks, sure, I had clients and I thought maybe they were my clients and they were to some degree, but they weren’t really, they were the bank’s clients, right?
[20:39] Meaning if I were to leave that bank and go to some new shop and call that client and say, hey, it’s Jim Griffin, remember me? Hey, at least half the time, if not 70% of the time, those quote unquote clients would say, yeah, Jim, it’s great, it’s been great, but I got up all my money at ubs.
[21:00] Or they, you know, I’ve got all these loans from these one or two banks, I gotta transact, I gotta listen to them, you know, I can’t. And I understand that.
[21:09] Right. So the point being is they’re really not your clients at the end of the day, but when you’re an independent advisory firm, they are really your clients, Meaning they can call anyone they want.
[21:21] And I don’t hold their assets here or lend money to them.
[21:26] They’re clients and repeat clients because they are doing so based on the value that you give them, which is a nice feeling. So I knew that going in and that frankly was my goal, to have a portfolio of clients where we truly had a relationship, a value exchange between us.
[21:47] And that is absolutely what we have today.
[21:50] Fortunately or unfortunately, I’m a workaholic and I can’t really imagine ever retiring, ever.
[21:59] Meaning if I became a trillionaire suddenly because I called the 10 Year Treasury Yield right tomorrow and put a big bet on it, I would always have to do something.
[22:10] Sure. What’s the end game for derivative logic? I don’t know, A sale, some kind of buyout, a transition to employee owns, and I peace out whenever, but I don’t really see that happening probably ever, frankly.
[22:25] I’ll probably drop dead at this desk at some point. Sad to say, if you ask my wife, but it’s probably true. And frankly, most of us at Derivative Logic feel the same way.
[22:35] We have sort of a combination of salaried employees and there’s a maybe a couple that aren’t salaried and need more freedom to do other things. But yeah, I really enjoy what we’ve built and our client relationships are the lifeblood of what we do.
[22:51] And it’s just really enjoyable, benefiting people’s lives.
[22:56] Kevin Choquette: I can imagine. You’re in it, you’re in the day to day, you’re blocking tackle. If you take a moment and think back to you and rex starting this 11 years ago and.
[23:06] And look at, you know, like, I have to imagine there’s quite a bit of distance traveled from, okay, we’re going out on our own to where you’re at now. How’s.
[23:16] What’s the experience of kind of looking back at that?
[23:20] Jim Griffin: Well, one of the first memories that I have is we were going to. Because I’m in Northern California, but have a long Southern California history and New York history. But one of my first memories that I can recall literally in the early days is we were going, Rex and I, we were going down to Southern California driving because we didn’t want to spend money on airfare to Southern California.
[23:44] And it was a really early morning because, you know, we just chose to leave it, you know, 2 or 3am you know how that goes if you’ve ever driven, say, from San Francisco to LA or Orange County.
[23:55] So we’re driving coffee, and I look back and Rex is curled up in the backseat asleep. Right. This is not a guy I’ve known for very long. Right. Maybe a year.
[24:06] And it was sort of two memories. Like, one is like, oh, my God, what am I doing to this guy? But then on the flip side, it’s, we’re doing it.
[24:15] We’re going to be successful no matter what. And I’m sure you’d agree, Kevin, it’s really just that incremental daily chipping away toward your goal that really is the secret sauce.
[24:28] It’s just a daily. Not grind, but, you know, just daily micro goals work every single day that we all know already. We may know it, but lots of folks don’t do it.
[24:40] And we. We definitely did that and frankly, are still doing it. So it’s just something I’ve always enjoyed, that kind of dynamic, of course, as you get older, you can’t always hack it to that degree, but so far, so good.
[24:53] Kevin Choquette: You might buy a ticket this time and just fly down.
[24:56] Jim Griffin: Oh, yeah, yeah. We haven’t driven in a while. It’s been a while. It’s been a while. Yeah.
[25:02] Kevin Choquette: And maybe you just gave me the answer. But I wonder, is there any, you know, maybe not big ist, but any one or two lessons that you think you’ve really kind of have been brought to you on this journey of kind of going solo and being successful at it?
[25:19] Jim Griffin: I think the biggest thing to a consulting or advisory type of business is integrity, as you probably have seen in your own work. You know, there’s been many instances where we could have maybe skirted the lines maybe made bigger fees or done this or that.
[25:40] And we never have sort of entertained those offerings or thoughts, and we never will, because, frankly, in the long run, it’s just not worth it. So we have a sterling reputation in the marketplace.
[25:53] We take that extremely seriously. It’s very important to us.
[25:58] And that integrity, frankly, has resulted in, you know, maybe slower growth, sometimes maybe a lower fee than could have been achieved or a lost client or things like that, because it’s just.
[26:11] It’s just something we don’t do. And really, I’m blessed with an excellent founding partner in Rex Evans. So he and I have been of the same mind and that integrity, respect in others from day one.
[26:26] And, you know, one thing my father told me, who was pretty successful in his own business, Never have a partner. Right. We’ve all heard that.
[26:33] And I was a little scared in the beginning to have a partner, but, man, we’ve really done it together. And Rex is just the world’s greatest partner. Couldn’t have done any of it without him.
[26:43] And he continues to be that way and has that same extremely high level of integrity and work ethic, frankly, that I have.
[26:51] Kevin Choquette: Do you find that you guys have unique skill sets that are complementary, or are you quite similar and think the same and kind of execute the same?
[27:01] Jim Griffin: No, we definitely have different skill sets. Do you want me to outline what those are?
[27:06] Kevin Choquette: Well, I don’t know that you need to outline, but. But I wonder, you know, sometimes the friction is positive, right? Sometimes having somebody who’s OCD alongside a guy who’s ADD actually can work out, right?
[27:25] Where there’s one guy flying around with all these ideas and chasing all these squirrels, and the other guy’s looking at him going, hey, you’re crazy. And, oh, by the way, we still need to get this done.
[27:35] And there can be some superpowers in that. I just wonder if there’s any dynamic like that between the two of you.
[27:41] Jim Griffin: There is absolutely a dynamic like that. So we both have the big ideas and the strategy ideas and whatnot.
[27:51] I’m probably a little bit more of a better grinder than maybe Rex is, but he’s very good, frankly. Also, Rex has much deeper market experience and product experience than I do, believe it or not.
[28:04] Meaning he was in the derivatives game 12, 15 years longer than me, and believe it or not, that’s valuable. So there’s many times where I’ll be looking at some transactions, some derivative, and I’m maybe stumped or aren’t seeing something, and Rex will come over my shoulder and go, boom.
[28:22] See this? And it’s like, you know, they’ll let someone turn the lights on.
[28:26] So he’s, you know, very, very additive in that respect, among others. But I would say over and all, to answer your question, Kevin, we’re pretty similar for the most part.
[28:38] Rex has more cycle experience than me and can come out of left field with some really positive ad there.
[28:49] I can be probably more the automaton in terms of just working too long, maybe doing too much, meaning it turns out to be helpful in the end, but in the moment can be maybe even sometimes abrasive because of focus.
[29:05] But both of those skill sets, among others, that we work very well together.
[29:10] Kevin Choquette: So I’m going to go back to this thing you just mentioned about like, you know, hopping in the car, rolling out at 2 or 3am and going down to SoCal, which is to say, at that point, you’re betting everything on your success.
[29:21] You’re 11 years in. You guys are. I, I’m pretty confident doing very well.
[29:27] How do you manage the change in, you know, waiting for the phone to ring to what you just said a few moments ago, where the phone’s ringing all the time and there’s maybe too much inbound flow and you’ve got a completely different challenge.
[29:42] How do you, how do you deal with being on the other side of success and all of the inflow, really.
[29:49] Jim Griffin: Just having more resources to put toward it. And that’s again, people and technology, the tech to sort of do the beginning stages of, say, a specific transaction or consultation, more individual people, obviously, to take on some of that extra demand.
[30:10] Obviously those people having the same or even more expertise than me given realms or subject matter.
[30:18] But really the biggest challenge is maintaining the service level and the quick responsiveness and things like that.
[30:24] Kevin Choquette: Having the right people on the bus.
[30:27] Jim Griffin: Correct. Correct. And I would say, I don’t know if you’ve had to deal with this just from a management perspective, the people aspect is the most difficult.
[30:37] It is.
[30:38] Kevin Choquette: I’ve heard, I’ve heard people say business would be great if not for clients and employees. It’s always, I mean, that’s the joy and the challenge. For sure.
[30:51] Jim Griffin: It is. And that’s where the style comes in. And the, you know, what not. And really more than anything is keeping the ego in check. That’s huge. So we don’t, we don’t really have any egos over here, or at least try not to.
[31:04] And if one shows up, I think we all kind of rely on each other to call that out. So. Because that’s just counterproductive in the long run.
[31:12] Kevin Choquette: What about the end of the day? What do you do to kick your feet up? And when you can make yourself not be a workaholic, what did you find? Relief.
[31:21] Jim Griffin: So my sort of personal habits or hobbies have changed over time.
[31:28] In my 20s, I was a professional skydiver and like avid scuba diver and rock climber and surfer.
[31:35] A lot of those things have gone to the wayside. Just as I’ve aged, it’s just harder.
[31:40] Kevin Choquette: Yep.
[31:41] Jim Griffin: And I have teenage kids and my son, who’s 19 now, about five years ago, picked up the guitar and is quite adept and skilled and I did with him. So I would say sort of an equal hobby to the outdoors and surfing and those things is playing the guitar in a band.
[32:01] So I’m in a couple of bands and we, you know, it’s the typical tacky stuff where I’m playing at a winery or a wedding or something like that and there’s 30 people in the audience and sort of silly, but it is really fun.
[32:14] And by the way, anyone listening, if you’re looking for something to pick up as you age, something you will never, never master, pick up the guitar. It’s. It’s quite a hobby to take up.
[32:26] Kevin Choquette: That’s great.
[32:27] I don’t want to keep you too much longer. Any message you think for an aspiring entrepreneur? Obviously these middle market guys are some of them. There’s also people in other segments of the real estate industry, be they service providers or vendors or builders.
[32:47] Just any. Any thoughts you think you might want to pass along to the aspiring entrepreneur or even the one who thought they were doing everything right and now the market’s turned against them and, you know, facing some significant headwinds.
[33:00] Jim Griffin: Well, I’m probably not going to say anything that’s new, but for me personally, it’s having a very large goal, visioning myself successful in achieving that goal, but backing all of that up with microhabits that I’m executing every day and showing up and the executing or the working toward those micro goals and good habits every day, that’s absolutely critical.
[33:30] Kevin Choquette: I don’t want to drag this on, but that’s too interesting to let go. What do you mean when you say microhabits? How does that show up for you?
[33:39] Jim Griffin: I meant micro goals when I said microhabits. I’m sorry, Micro goals in that if there’s some new line of business that I think we might should be in, you know, committing a certain amount of time and having a goal of that time commitment and Investigating it as an example to learn about that line of business and not letting anything else get in the way, even if that means working an hour longer or whatnot.
[34:04] Actually committing to a plan like that and investing the time to do that.
[34:09] Kevin Choquette: Chipping away at it, like you said.
[34:10] Jim Griffin: Before, just one example of a micro goal. Because, you know, it’s easy to envision the success that you’re reaching for, you know, through your mind’s eye. That’s very important. Visualization.
[34:27] But even visualization without true work and working toward those micro goals daily is nothing. You gotta have both.
[34:37] And that’s just it, just having a plan. Micro goals, not sort of, you know, drifting day to day. Oh, get around to that or this and that, that’s just a killer.
[34:47] I’ve been there, I’ve done that. I regret things, laziness that I’ve had in that regard. So just for me personally, the micro goals are critical.
[34:55] Kevin Choquette: I dig it. Jim, thank you so much for taking the time, listeners. Thank you for tuning in. DerivativeLogic.com is that the domain for you guys?
[35:07] Jim Griffin: That’s it.
[35:07] Kevin Choquette: Okay. Yeah. And you guys can find how to get to Jim through there quite easily. Jim, I’ll leave it for you for anything you want to say on the close up, but thank you again for your time.
[35:18] I really appreciate it.
[35:20] Jim Griffin: Thank you, Kevin. Really appreciate you having us and me on your podcast.
